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The US software company Salesforce plans to pay almost $ 28 billion for the Slack social work platform - more than good business for the start-up's founders and investors. Slack recently had sales of a good $ 800 million.
A so-called multiple of purchase price to sales of 35 is unusual in this dimension even for the US start-up world, which is used to success.
The shareholders as well as the employees around the Slack founders Cal Henderson and Stewart Butterfield should rub their hands.
But at the same time, the takeover ends another promising start-up story - a legend that a David like Slack can take on a giant like Microsoft on his own.
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In 2016, Microsoft considered buying Slack itself, when a possible purchase price of eight billion dollars was rumored.
But the deal failed after Microsoft founder Bill Gates, among others, vetoed it.
Instead, Microsoft launched its own social working platform, Teams.
The design of the software is based on Microsoft's Office platform, but the functions are strikingly similar to those that have made Slack so successful: collaborative work in documents, chat channels for work groups instead of permanent e-mail chains, integration of cloud functions for storing Documents.
In 2019, Henderson was confident in a conversation with WELT: “We work with artificial intelligence to find relevant information within the company network.
The more customers use Slack, the more helpful it becomes for all users. ”That is why it is so important for the company to keep growing.
Microsoft is resorting to an old trick
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Almost mockingly, Slack registered the copy in an open letter that the company published in November 2016 in the “New York Times”, entitled “Dear Microsoft”.
In it, Slack threw out the gauntlet: "1.
Features don't matter.
2. An open platform is essential.
3. You have to do it with love. ”Four years later, Slack has twelve million users.
Microsoft's CEO Satya Nadella announced at the end of October that teams, on the other hand, could increase from 75 to 115 million users in 2020 alone, driven by the corona pandemic.
Slack was wrong with the assumptions in his letter.
The sale to Microsoft's cloud competitor Salesforce comes at exactly the right moment; David alone had no chance against Goliath.
Because Microsoft was able to use an old trick in the fight against Slack: bundling software, the trick that once helped Internet Explorer defeat Netscape.
Teams has simply been made part of the Office 365 software suite, which tens of thousands of companies have already subscribed to.
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Promptly, these potential customers no longer saw any reason to pay extra to Slack.
With Salesforce, Slack now has a potent parent company that can use the same trick: In the future, Slack will likely be marketed as an internal chat client as part of a Salesforce package.
The story of Slack is an example of how the US Internet giants act in the face of successful smaller competitors: Either they are mercilessly copied - or bought up.
The market power, the money reserves of the internet giants are usually sufficient to equalize any starting advantage of smaller innovative start-ups.
In Microsoft's corporate history alone, one billion acquisitions follow the next: Microsoft paid 8.5 billion dollars in 2011 for the communication platform Skype - the software served as the basis for teams five years later.
In 2016, this was followed by the purchase of the business networking platform LinkedIn, which, driven by Microsoft's marketing power, is currently successfully driving the German competitor Xing into insignificance.
Finally, in 2018, Microsoft bought the open source programming platform Github for 7.5 billion dollars and thus got central access to the booming open source community.
Up-and-coming competitors are being bought up
Not only Microsoft is pursuing these strategies: IBM bought the open source business software Red Hat for 35 billion dollars in 2019.
Facebook's billion dollar purchases from WhatsApp and Instagram are perhaps the most famous management decisions made by Mark Zuckerberg.
Google bought the smart home start-up Nest for 3.2 billion in 2014, and Apple bought the headphone maker Beats for three billion in the same year.
All acquisitions are characterized by the fact that the giants not only bought basic skills, but also took up emerging competitors - even if only in parts of their own business - from the market.
If an acquisition does not seem possible or sensible, strategy 2 follows: copy and bundle with your own successful products.
Teams and Onedrive are two examples of Microsoft product copies cornering the original startups Slack and Dropbox.
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The social network Snapchat can also tell you a thing or two about it - since Facebook copied the Stories function, Snapchat has only grown slowly in key markets with currently a good 230 million users, while Facebook's Instagram has passed the billion mark.
Google has put all competitors of its Maps service in distress by bundling them with the search and driven the smaller ones out of the market.
The examples show how difficult it is to compete against giant corporations that, thanks to profits in the billions, can manage every acquisition, exceed every marketing budget of a start-up and copy every product.
Of course, that does not mean that it is no longer possible to successfully found a business - the new stars of the sharing economy and the cloud computing scene show that there are always new niches, that development is faster than the giants' striving to expand.
Thanks to the competition that the giants make among themselves, a market failure in the classic sense, with market power and monopoly prices, cannot be determined - there have never been internet and software services for consumers and corporate customers that are cheaper and more varied than today.
Nevertheless, the competition watchdogs of the EU and the USA are regarding the acquisitions and copying strategies of Google, Microsoft, Facebook, Apple and Amazon with concern - and are planning a new form of competition legislation to slow down the giants.
Control law shouldn't please tech giants
On December 15th, Industry Commissioner Thierry Breton and the Vice President Margrethe Vestager, who is responsible for digital, want to present two long-awaited legislative proposals to break the power of the big internet companies.
Documents with drafts of the law for digital markets and the law for digital services are already circulating in Brussels - the considerations that are known should not please the American tech giants: In the future there will be special rules for so-called gatekeepers, technology companies that are so powerful are that they control entire markets.
Marketplaces such as Amazon, app stores such as those from Apple and Google, search engines such as Google, cloud services such as AWS and social networks such as Facebook should be included.
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In particular, the bundling of services for one's own benefit should no longer be so easy in the future.
The companies should share their data treasures with smaller competitors.
Providers like Google could be banned from displaying their own products such as the map service Maps prominently in search results.
In extreme cases, one has to think about breaking up dominant corporations, Breton recently told WELT AM SONNTAG.
Companies that do not adhere to the EU guidelines should possibly be barred from access to the internal market in whole or in part.
Above all, however, the EU Commission intends to intervene under antitrust law in the future when a monopoly position only threatens, and not only when it has arisen.
This is a novelty.
In combination, the new rules are intended to ensure that small start-ups have a chance against the giants.
In the debate was also to prohibit or even reverse the acquisitions of these smaller competitors.
However, there is currently no longer any talk of this: In current negotiations, the plans could be watered down further;
not least because the big tech companies are currently lobbying heavily against the plans.
Vestager: "Horrors of Silicon Valley"
The corporations are also trying to get consumers on their side: Google, for example, warned last week that Google Maps would have to be partially abandoned in Europe if the bills become a reality.
The plans are also an admission that the previous competition policy has not managed to prevent the digital quasi-monopolies.
Vestager has earned a reputation as the horror of Silicon Valley with spectacular antitrust proceedings against Google and was even attacked by Donald Trump for its dealings with the tech companies.
But these antitrust proceedings took years, were still unable to intervene retrospectively once the market distortions had already established themselves, and were of little use despite high fines.